The Shumlin budget: Removing 'disincentives,' or a blow to the poor?

Officials make case with media as well as lawmakers

Jan. 28, 2013

Written by

Free Press Staff Writer

MONTPELIER — More than a dozen top-ranking managers assembled Monday afternoon to brief five reporters on the details of two of Gov. Peter Shumlin’s most controversial budget proposals.

It was an unusual for the administration to court the press with such an array of officials, but Secretary of Administration Jeb Spaulding explained, “The topics we are talking about today are very important to the governor.”

The hot topics are:

• Increasing child care subsidies by $17 million and paying for the increase by shrinking the state’s contribution to an earned income tax credit that goes to low-income Vermonters.

• Limiting the length of time households with children are eligible for the cash and other benefits available through state’s welfare-to-work program, known as Reach-Up. The proposed limits are 36 consecutive months, with an additional 24 possible after a one-year hiatus.

“We know we have a tough row to hoe here,” Spaulding said, acknowledging the criticisms that have already surfaced to both ideas. The toughest sell may be with the governor’s own political colleagues — the Democratic majority in both the House and Senate — but public opinion matters, too. That’s where the media come into the picture.

“It is just trying to get the information out there,” Secretary of Human Services Douglas Racine said as an explanation for the unusual briefing.

Spaulding said the pair of proposals that have come under fire mesh with the governor’s focus on increasing job opportunities for Vermonters. “We want to make sure we are doing what we can to remove disincentives to getting back in the workforce,” he said.

Finding affordable child care is one of the major barriers that low-income Vermonters face and the remedy — more and bigger subsidies to shrink that burden — costs money, Spaulding said.

Currently about 5,900 families receive child-care subsidies. The payments are made based on the 2008 child care prices, with parents having to make up the difference between the benefits they receive and current market rates that run at least $30 per week higher, according to state officials.

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Given the state’s ongoing revenue struggles, Spaulding said, “If we are going to make significant investments, we have to talk about reallocations.”

It is the proposed reallocation of dollars from the earned income tax credit to child care subsidies that has generated criticism. About 44,000 Vermonters received earned income tax benefits last year. The state supplements the federal income tax benefits. The change the Shumlin administration proposes wouldn’t affect the federal benefit.

Christopher Curtis, staff attorney for Vermont Legal Aid, argues, “For the working poor, that tax credit was the only thing that allowed people to keep up because wages were stagnant.” He helped organize an event Friday to draw attention to the benefits of the tax credit and the consequences of reducing it.

“How come people with so little are being asked to pay so much?” Curtis asks.

Secretary of Human Services Racine has heard this criticism and was ready Monday with a response.

“It is a trade-off, no doubt about it,” Racine said. “But putting the money into child care gets a bigger bang for the buck,” he argued. “We feel this is an opportunity to do something significant for Vermont’s children,” he added, explaining that good child care helps children get off to a good start in school and life.

The tax credit is a once-a-year financial boost, rather than a steady amount families could count on, Racine argued.

Administration officials also noted that Vermont provides the second-highest earned income tax benefit. The proposed change would put the state more in the mainstream.

That’s also the argument state officials make for capping the length of time Vermont families can remain on the Reach-Up program. Vermont is the only state without a time limit on its welfare program.

David Yacavone, commissioner of the Department for Children and Families, suggested a three-year deadline would spur parents to find jobs and move toward self sufficiency more quickly.

“We have the latitude to exempt some people from this requirement,” Yacavone added, such as the disabled or people whose welfare-to-work plan includes getting a college degree.

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The cap as proposed would take effect next Oct. 1 and be retroactive. Officials said 1,188 of the 6,400 families on Reach-Up would hit the three-year mark by that date. Officials said caseworkers would focus attention on those folks well in advance.

On average, families spend 18-24 months on the Reach-Up program, officials said, so three years wasn’t an unreasonable limit. It would give people a year to find work after completing the 12-month pre-work program and 12-month work readiness program.

The time limit for the Reach-Up program wouldn’t affect families’ eligibility for the Three Squares food assistance program, fuel aid or health insurance, officials noted. “The goal isn’t to punish them,” Spaulding said.

“What is going to happen to these families?” Curtis at Legal Aid asked, referring to those bumped off the cash assistance. “The jobs aren’t going to magically appear. The governor was correct in his budget address. There are barriers to employment. Let’s address those first.”

Curtis pointed to the experience in Maine, which recently imposed limits on its welfare program. “The costs have been pushed onto local communities and general assistance programs. Clearly, shifting the burden doesn’t solve the underlying problem of barriers to employment,” Curtis said.

The Shumlin administration plans to press its case for these changes before legislative committees, with testimony scheduled Thursday before the House Human Services Committee.

Curtis will be there too, he said, arguing for Vermonters with little political power compared to the muscle the administration plans to exert.